Slashing input prices: Goodwill gesture or something else?

Source: Slashing input prices: Goodwill gesture or something else? | The Herald (Opinion)

Obert Chifamba Agri-Insight

WHILE the recent move by agro-input suppliers to reduce prices of basic agricultural inputs may have literally made it easy for farmers to access the commodities, it has also sent the imagination of those who do not take things at face value running wild with theories on what could have motivated it.

Coming at a time when the peak of the planting season is almost over with most farmers most likely to have secured the bulk of their input requirements, the timing of the move seems a bit offish given that it will most likely benefit a few farmers. This simply means that it will not make much impact in terms of shaping the production landscape for this season.

Of course, the move may have been done to enthuse farmers to procure more inputs and consequently increase the hectarages of various crops this summer season but the agro-input suppliers also need to realise that their delays in reducing the prices also meant that precious yields were slipping away with each day that passed. Agronomists have always reiterated that a day lost can easily translate into a loss of 50kg of produce per hectare per day given that heat units are at their highest at the start of the season and decrease as it progresses.

Some farmers are obviously going to benefit from the development but they will be planting late, which compromises their yields. Agro-input dealers could not have made this decision at a better time than the start of the season to enable all resource-constrained farmers to access the inputs and plant in time.

Such a move would have allowed farmers to tap into the abundant heat units that would have significantly influenced their yields for the better, come the end of the season. Now the bulk of the heat units are gone and the farmers have access to inputs to expand their hectarages but that will not add much to what would have been realised from the initial hectarages.

Maybe the move may benefit those farmers that usually plan ahead and will buy the relatively affordable inputs and store for next season. Such farmers, however, need to have the proper storage facilities to ensure the inputs are not compromised in terms of quality. It is always crucial for leftover seed or even fertilisers to be stashed in the right storage facilities, if they are to retain their potency for a new season.

A random visit to most agro-dealers’ shops in Harare has shown that they have revised prices downwards for both local currency and the United States dollar denominated goods.

Although a 25kg bag of maize seed has retained its price of $76 500 (Zimbabwean dollars), it has recorded a seven percent decline for the US dollar price calculated on the basis of the interbank rate. A 50kg bag of Compound D fertiliser has recorded a nine percent drop from $31 050 to $28 120 with the US dollar price recording a 16 percent drop from US$49 to US$42.

Top dressing fertiliser had the largest reduction from $44 850 to $39 960 per bag, marking an 11 percent change while the price dropped from US$71 to US$59 for the hard currency regime, marking a 17 percent change.

Herbicides were not left in the cold with some of them, for instance, atrazine recording an eight percent drop from $6 094 to $5 600 while the US dollar component recorded a 14 percent drop from US$10 to US$8.

There might have been changes in the figures but the reality on the ground is that this will not make much impact in terms of influencing the eventual hectarages farmers will plant. There will obviously be not much planting activities, as most farmers are now almost fully conversant with the changes taking place in their seasons.

One logical explanation for the sudden drop in prices may be that there is no longer demand for the products with most farmers having completed the planting stage and now focusing on other activities such as fertiliser application, weed management and disease and pest control.

On the one hand, the Government’s inputs support programmes may have taken care of most of the farmers’ input requirements, especially from the smallholder category where programmes like Pfumvudza/Intwasa have expanded their packages and subsequently the targeted hectarages. This means that some of the input suppliers may be stuck with loads of inputs without takers, which is reflecting badly on their business performances. The move to sell the inputs at reduced prices may therefore be an attempt to at least recoup a bit of the money they invested in the procurement of the inputs and not an act of compassion towards the farmers on the backdrop of an illiquid economy.

If that is the case, then the dealers have learnt through the hard way that their targeted clientele cannot afford the cut-throat prices they are charging for their services and, therefore, need to also understand the socio-economic realities of such people. This is essentially not good for business because for survival they need to procure and dispose goods at profitable prices to enable them to re-stock. The problem with most such businesses is that they adopt speculative pricing mechanisms and blame everything on the ever-changing economic trends.

Most farmers have also learnt to be resourceful on the backdrop of growing calls by both the Government and other interested stakeholders for them to utilise locally available resources and not rely on out-sourcing every time. Some are involved in barter trading with colleagues in their communities and in most cases they end up with most of their input requirements through that way.

It is also not surprising that many farmers usually have carry-over inputs from previous seasons, especially if they are delivered late and are not used in their entirety.

There is also a possibility that some of the input suppliers may have reduced prices to dent the Government’s support programmes given that the prices for the latter’s inputs are in some cases on the higher side than those in shops. This means that farmers would naturally rush to access anything that comes as a cheaper option but the sad reality is that sponsored agricultural production has more benefits than self-financed.

Most support schemes are now coming with technical support services that make farmers’ operations a lot simpler. The fact that the programmes allow farmers to produce first then pay later for services rendered also serves as a push factor for farmers to be more committed to meet targets and settle their debts.

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